On 4 November 2014, the European Central Bank became the prudential regulator for all Eurozone banks under the Single Supervisory Mechanism. The SSM does not introduce another layer of substantive regulation but significantly changes the way in which prudential supervision is applied in practice within the Eurozone. The intent is to provide for more consistent and harmonized supervisory practices and standards within the Eurozone, which is an inherently difficult goal to achieve given local country complexities and the continuing need to rely on on-the-ground national regulators. The ECB will nonetheless have a powerful role in the supervisory landscape and will doubtless try to shape and steer supervisory culture going forward.

Introduction -

On 30 September 2014, the European Central Bank (“ECB”) published its Guide to Banking Supervision,1 which sets out practical guidance for banks falling within its new supervisory remit. The Guide builds on the ECB regulation published on 25 April 2014, which established a framework for cooperation within the Single Supervisory Mechanism (“SSM”) between the ECB and national regulators (the “Framework Regulation”).2 This note sets out key changes affecting Eurozone banks, including subsidiaries of international banking groups within the Eurozone.